11/16/2006 @ 6:03PM

Survey: XM, Sirius Should Pay More For Music

Sirius and XM satellite radio services arent being fair, a recent survey claims.

As the rival satellite companies negotiate a new six-year royalty fees agreement with the Copyright Royalty Board, SoundExchange, a non-profit representing the music industry, contends
Sirius Satellite Radio
and
XM Satellite Radio
should pay more for broadcasting music.

The CRB, which governs the fair use of this intellectual property, is set to adopt a new rate by next year or early 2008. Until then, companies such as Sirius and XM will pay current rates, an estimated 4% to 7% of total revenues.

This issue of the impact of music to providers is key to many of our proceedings, said CRBs Chief Copyright Royalty Judge to Forbes.com in an e-mail. We will carefully consider it as the proceeding progresses.

The CRB is considering new rates ranging from 10% to 23% of total revenue each year through 2012. Thats an average of 16.3% each year or $1.84 per month per subscription.

In a joint statement Thursday, XM and Sirius said: Consumers, artists and the recording industry all benefit from satellite radios multi-billion dollar investment in a dynamic new promotional platform for music.

Together we have paid, and under our fair proposal, will continue to pay significant compensation to artists and their record companies. By contrast, our primary competition, terrestrial radio, pays nothing for the sound recordings it uses.

SoundExchanges study was captained by Professor Yoram Wind of the Wharton School at the University of Pennsylvania. It reveals that satellite radio subscribers, as well as prospective subscribers, prefer commercial-free music to stars or sports talk.

In a news release, SoundExchange said, Using testimony from a variety of leading experts, including Wind, SoundExchanges filing made the survey available to the CRB in support of SoundExchanges assertion that fairer royalties should be paid by XM and Sirius to artists and copyright holders whose works are transmitted by those services.

As described on its Web site, SoundExchange is composed of hundreds of recording companies and thousands of artists united in receiving fair compensation for the licensing of their music in the new and ever-expanding digital world.

Its study, which surveyed 428 random satellite radio subscribers and prospective subscribers, was not meant to prove or disprove if XM and Sirius should pay more than in royalty fees than it already does. It rather indicates that the music holds greater value to the listener than any of the other various channels.

One clear takeaway from this survey is that the foundation of satellite radio is built on music, said SoundExchange Executive Director John Simson in a news release. Without music, satellite services would crumble.

Shares of XM were down 2.29%, or 34 cents trading at $14.51, while Sirius shares were down slightly, less than 1% to $4.11.